O2 Ireland operating review

Total revenues in the fourth quarter were €250 million, an increase of 1.4% compared to the same period last year. Revenue for the full year was €991 million, an increase of 11.9% compared to the 11 month period to 31 December 2006. On a like for like basis growth was 2.8%. Mobile service revenue for the quarter was €231 million, an increase of 3.7% compared to the same period last year, reflecting the growth of the customer base and the increase in blended ARPU. The termination rate cut reduced fourth quarter service revenue by just under 1%. Mobile service revenue for the year was €935 million, a year on year increase of 4.0% over the previous year on a comparable basis.

OIBDA for the quarter was €63 million, a decrease of 15.2% compared to the same period last year. This included a charge of €13.4 million, related to costs to reorganise the IT and networks division in order to capture future efficiency savings. The business has entered exclusive negotiations with IBM to supply and manage O2 Ireland's IT services. Excluding this charge OIBDA would have been €76 million. OIBDA for the year was €316 million, 2.0% higher compared to the 11 month period to 31 December 2006 and 6.6% lower year on year on a comparable basis, while excluding personnel reorganisation charges (totalling €16.2 million), OIBDA would have been €333 million, a decline of 1.8% year on year on a comparable basis.

OIBDA margin in the fourth quarter was 25.1%; excluding the above mentioned charge it was 30.5%. OIBDA margin for the year was 31.9%, while excluding all personnel reorganisation charges it was 33.6%.

O2 Ireland traded well in the fourth quarter, with gross connections up 4.6% compared to the same quarter last year. Net connections totalled 14,000 in the fourth quarter. At the end of December the total customer base was 1.6 million customers, 0.9% higher than at the same time last year. The number of mobile broadband customers stood at 24,500 by the end of the year, after a successful launch in July 2007.

O2 Ireland added a total of 22,000 net contract customers in the quarter, 26.8% higher than the fourth quarter last year, and for the year total contract net additions were 70,000, 24.2% higher than in 2006. Quarterly monthly contract ARPU of €78.8 was 3.3% lower than the fourth quarter last year and for the year contract ARPU was €82.3, 3.1% lower than 2006 due to the introduction of new customers offers and promotions.

Due to the impact of increased competitor activity, the pre pay customer base fell during the quarter, by 8,000 customers. During the year the pre pay base fell by a total of 56,000 customers, compared to a loss of 26,000 in 2006, and ended the year at 1.1 million customers, a decline of 4.9% year on year. Monthly pre pay ARPU was €29.0, a decrease of 1.9% on the same period a year ago, while ARPU for the year was €29.0, a decline of 1.2% year on year.

Blended monthly ARPU in the fourth quarter of  €45.7 was 1.6% higher than the fourth quarter last year, mainly due to the higher proportion of contract subscribers on the base. Blended ARPU for the year was €45.9, growth of 1.6% year on year.

Blended quarterly monthly minutes of use increased by 2.5% year on year to 252 minutes, again driven by the higher proportion of contract subscribers in the base. Minutes of use for the year were 248, with a year on year growth of 4.9%.

Quarterly monthly data ARPU was €12.4, 23.5% higher than the fourth quarter last year, driven by increased use of non-SMS services. Data ARPU for the year was €11.7 (+19.6% year on year).